“Probably Not a Coincidence that the Prime Minister and I Were in Seattle meeting with Warren Buffett”

Canadian Finance Minister boasts about Crony Capitalist Bailout of collapsed mortgage lender. But his assumptions might be wrong.

“Just like I said, a back door bailout in Exchange for something down the line. Very very dirty,” tweeted Bay Area short-seller Marc Cohodes in response to Canadian Finance Minister Bill Morneau’s gloating about the government’s role in the bailout of Home Capital Group.

Home Capital Group is Canada’s largest alternative mortgage lender. It focuses on new immigrants and subprime borrowers that have been turned down by the banks. It had been melting down ever since revelations of liar loans surfaced in 2015. Liar loans don’t exist in Canada’s clean housing market. They’re a US thing. By April this year, Home Capital was collapsing as a run on its deposits crushed its funding sources. A very onerous and controversial funding package was arranged in all haste to keep it afloat, as the industry – and as we now know, the Canadian government – worried about contagion.

The Canadian housing bubble is sitting on needles, and everyone knows it.

On June 22, when Warren Buffett’s rescue of Home Capital Group became known, its shares, after having already soared over the prior days, soared another 27% to C$19, having tripled from their crisis low in late April. But since that propitious day, its shares have fallen nearly 30%.

Buffett, of course, didn’t buy the shares in the market as normal investors would have had to do. His firm Berkshire Hathaway bought shares directly from Home Capital, giving it a 38% stake, and thus diluting all other shareholders. Berkshire Hathaway also extended Home Capital a C$2-billion loan.

“Many eyebrows were raised when the oracle of Omaha, Warren Buffett, rode in on his white horse to save Canada’s largest alternative lender, Home Capital Group,” wrote ever vigilant Steve Saretsky at Vancouver Condo Guide today.

“Many believed it was a backdoor bailout, engineered by the Canadian Government,” he said. “It seems our wildest conspiracies have been vindicated, by the Canadian finance minister himself.”

During an unguarded moment in the interview with BNN, Morneau prided himself of the arrangement. But first he explained just how crucial Canada’s housing bubble is to the government: “I expect for the entire time that I’m in the role of Minister of Finance – the entire time we’re in government – we’re going to stay closely focused on this,” he assured his citizens. “We want to make sure people’s big investment… is safe and secure as best we can,” he said, even as the government is trying to cool the housing market.

And then Morneau got to Home Capital Group and let this slip:

“We obviously wanted to see a private-sector solution for Home Capital. The company seems to have found itself an approach that will be successful. I will say that it was probably not a coincidence that the Prime Minister and I were in Seattle meeting with Warren Buffett a few weeks before Warren Buffett came in and decided to make an investment in Home Capital.

Crony capitalism?

“We certainly didn’t talk about that file, but we talked about the Canadian market, we talked about the strong economy that we were seeing, and I think as he moved forward that was a positive thing for Home Capital and certainly good for our market.”

Asked if the conversation also discussed Canada’s housing market, he said:

“I believe we did talk about our view that while the housing market was rising at an unsustainable pace that Canadians have generally seen very low rates of walking away from their homes. So that’s a little different than the US situation.”

He’s talking about “jingle mail” during the US housing bust. But he might be mistaken in his logic about Canadians being a lot different from Americans when it comes to walking away from mortgages.

So here’s some useful info for Morneau: Only 12 US states have non-recourse mortgages, where lenders are barred from going after homeowners beyond the collateral (the home) and where homeowners can “walk away” from their mortgage.

The remaining 38 states and the District of Columbia have recourse mortgages where lenders may obtain a “deficiency judgment” to recoup the mortgage debt beyond the value of the collateral. Thus, the vast majority of states are recourse states. Of the big four states, only California is non-recourse. New York, Texas, and Florida are recourse states.

In Canada, two provinces are non-recourse – Alberta and Saskatchewan. The rest are recourse. Similar as in the US. And as in the US, defaulted homeowners in Canada can seek protection from creditors in bankruptcy court.

The main difference in the “Canadians-won’t-walk-away” theme trotted out endlessly by Canadian housing bubble and banking advocates and by the government is that the US had a massive housing crash during the Financial Crisis and Canada did not.

Instead, Canada’s home prices experienced a brief dip before the bubble resumed with renewed vigor. Homeowners don’t walk away from mortgages when prices are soaring; when push comes to shove, they can always sell the home and pay off the mortgage. The walk-away issue arises only during a sustained housing crash, when the proceeds from the sale of the home – if it can even be sold at all – fall far short of paying off the mortgage. That’s what happened in the US.

Canada is now uniquely primed for a housing bust, perhaps more so than any other country in the world. And if home prices crash – another US thing that cannot happen in Canada – the theory that Canadians will not walk away from their mortgages and will not let their banks hang out to dry will be sorely tested. Read… Can a US-style Housing Crisis and “Jingle Mail” Hit Canada’s Banks?

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113 comments for ““Probably Not a Coincidence that the Prime Minister and I Were in Seattle meeting with Warren Buffett””

Neil

Jul 24, 2017 at 3:00 pm

The show must go on for Canada, and liberal govt. Canada is ruled by army of idiots, including its central bank governor Poloz. Politicians are masters in art of selling country to foreigner. Buffet investment is not smart , He is just making easy money ; its Canada politicians like Trudeau, Morneau (The moron) and policy makers including Poloz are IDOITs.

Gershon

Jul 24, 2017 at 6:40 pm

Politicians like Trudeau do not rise out of the ground. They are elected by the same kind of imbeciles who believed a Goldman Sachs water carrier would deliver “hope and change.”

People and nations get the governance they deserve.

walter map

Jul 25, 2017 at 6:48 am

“People and nations get the governance they deserve.”

That should frighten you.

ian

Jul 26, 2017 at 2:29 am

Frightening but true I’m afraid. Look at the recent UK elections where that waste of skin Corbyn garners far more votes than previously expected by promising free stuff to all major constituent groupings. Anybody with 2 brain cells to rub together knew it was a lie, knew it was impossible but the votes came. The fact that the conservatives failed to bury this clown is to their everlasting shame.

Stevedcfc72

Jul 24, 2017 at 3:17 pm

Is IDOITS Canadian for idiots lol.

Hasn’t the current man in charge at the Bank of England Mark Carney had something to do with this Canadian Housing bubble?

OutLookingIn

Jul 25, 2017 at 10:53 am

Yes. Carney is Canadian by birth ONLY.

After graduating high school, he immediately attended Harvard. After successfully graduating with a degree in economics, he then attended two colleges in Oxford England, where he gained a doctorate in the same field.
He then spent the next 13 years globe trotting for Goldman Sachs, before showing up in the Canadian financial sector.
Just another actor from the “World Squid” (Goldman Sachs) Same as the ex- Italian central banker Mario Draghi and former Goldman Sachs alumni member is head of the EU central bank.

They don’t call it “The World Squid” for nothing!

ian

Jul 26, 2017 at 2:33 am

Oh please don’t remind us over here. We look on at the graphs of Canadian household debt and house prices that this clown left them with and watch how, after 8 years of so called recovery, we are still at virtually zero interest rates under his watch. Not only that but they went down again recently just so he could falsely claim ‘I told you so’ after Brexit vote which had no ill effects at all so far.

Mike R.

Jul 24, 2017 at 3:27 pm

In a sad sort of way, Warren Buffett’s whole life has been acquiring wealth. I know he has a son, but never hear much about family, hobbies, other interests.

Yes he was very astute but I suspect also more than a bit ruthless. You don’t acquire that much wealth being a “folksy Uncle Warren”.

Buffet allows himself to be the spokesman for the great capitalist economy of the US. I’m not sure he has the capacity to believe that things are not going to be as lucrative or bright at the last 3-4 decades in America. Perhaps he has to continue believing to justify his lifelong obsession.

Petunia

Jul 24, 2017 at 4:02 pm

Many years ago I watched a 60 Minutes segment on Buffet and his family. The married daughter had no idea he was rich and owned an average house in need of a kitchen remodel, which she said she couldn’t afford. That helped form the opinion I have of him to this day. What’s the point of all the money, if it doesn’t even benefit his children. It’s all about his ego, his reputation as a master of the universe.

bfast

Jul 24, 2017 at 4:33 pm

Um, please don’t forget that Buffet has donated gazillions to Bill Gates’ foundation, making him one of the super-philanthropists.

Rates

Jul 24, 2017 at 4:57 pm

Without the implicit bailout Buffet received from the Government during the 2008 crisis, he wouldn’t have had gazillions to donate.

This is par for the course for him. They call him an “American Capitalist” and it’s true since American Capitalism == Socialism for the rich.

IdahoPotato

Jul 24, 2017 at 6:01 pm

Not just the Gates Foundation. The Buffet family has a wide network and tradition of community giving.

The Gates Foundation is a tax dodge and a way to segregate assets, you don’t legally own them, but you totally control them. There is no charity going on with this bunch.

milking institute

Jul 24, 2017 at 6:38 pm

Ah yes,the bill gates foundation,the largest legal tax shelter in existence today. a very popular and effective solution to putting your billions outside the reach of the IRS. Mr Zuckerberg as well has created a sophisticated network of “charities” because he cares soo much,he really does! lol

memento mori

Jul 24, 2017 at 11:13 pm

Bill Gates, Buffet and cie are not american capitalist philanthropists. A true philanthropist will give without any publicity.
The issue here really is , should the government tax their billions and decide where that money goes or should they decide where it goes by putting it in a tax shelter configuration under the name of philanthropy and pursuing their pet projects in Africa and elsewhere.
I personally beleive that the money will spend better by them than the government but this is still an immoral thing as what they are doing is avoiding paying taxes plain and simple.

Keith

Jul 24, 2017 at 11:37 pm

Yes he has….EGO. If it wasn’t about ego he would have done it secretly.

The Gate’s Foundation as philanthropist lol…We’ll have to spread that one around in India and various African nations where they have first hand experience in Gate’s philanthropy….as D. Rockefeller once said “Own nothing. Control everything.” in reference to be a directing beneficiary of Trusts and Foundations.

Mary

Jul 24, 2017 at 5:14 pm

Not that I have any idea of the best parenting style for a billionaire. But maybe he wanted to foster independence in his children. There are plenty of stories of spoiled, wastrel kids sitting around waiting for handouts from wealthy parents.

I read an interview done earlier this year with Buffet’s daughter Susie. She was full of praise for the way her father handles money issues. Buffet’s children run their own charitable foundations which he has funded. In other words, he’s trying to give them a sense of responsibility and in the process fostering the self-respect that comes with independence.

Clearly no one in the orbit of such wealth escapes its influence, but it sounds like Buffet is trying to do the right thing by his family.

Ken

Jul 25, 2017 at 12:30 am

Yes, why keep your kids from being a slave to the hamster wheel? It builds character as you struggle to scrape by. Buffet is like Jobs – deep down a selfish prick with a huge ego.

RD Blakeslee

Jul 24, 2017 at 7:28 pm

Well, Buffet has said fiscally responsible things, like taxes should be raised.

You sound like someone who is unaware Corporate executives have a fiduciary responsibility (means they can be sued) to manage the enterprise in the best interest of the shareholders.

Raymond C. Rogers

Jul 24, 2017 at 11:35 pm

Remember, taxes should be raised for the average Joe, not for the rich who advocate more socialism. Same thing for health care, Buffet advocates a single payer system for you, but not for him. People who advocate this stuff should be forced to participate in the same system. Make him wait however long it takes under such advocate system to wait for a heart, or any other procedure for thing for thing for that matter.

The guy making $75,000 is taxed through the wazoo, and Buffet is at QE buffet, and still makes moves to engage in crony deals to steal weather from others.

I’ve been making comments on this guy for awhile. It’s amazing when a certain political party talked about being for the workers, yet turns a blind eye and is quite cozy with these folks. I think there was a term for these types, limousine……

I stand for capitalism, not cronyism. Buffet, Gates, Bezos, and Zuckerberg are not capitalists, they are crony in every sense of the word.

Kent

Jul 25, 2017 at 9:00 am

@Chip Javiert.

Corporate leaders absolutely do not have a responsibility to manage purely in the interests of their shareholders. That’s a myth that became popular in the 1980’s.

Corporations were originally organizations chartered by government to perform very specific functions. Functions that generally were primarily meant to benefit certain populations. The social function was paramount, not shareholder wealth creation.

Corporations only exist because of government legal constructs and regulations to protect investors, and the power of government to protect same. All funded through the wage deductions from our paychecks.

chip javert

Jul 25, 2017 at 9:06 pm

Kent

Take a deep breath – I didn’t claim “purely in the interest of their shareholders” – you incorrectly imply I said that.

Of course corporations have other obligations (rules, laws, regulations); doesn’t change the fact that corporate executives have a fiduciary responsibility to shareholders.

RangerOne

Jul 24, 2017 at 8:19 pm

Because dumping wealth on your kids has made children around the world so great? A handful of the super wealthy care to notice that giving children the world for free deprives the ability of learning how to manage their own lives and maybe struggle to earn some money.

Buffet is just a very frugal guy amd those habits will never leave him. Also an abilty which served to hasten his wealth accumlation.

That being said he clearly enjoys playing the wealth game perhaps for the social power it garners. And at this point he doesn’t have to think overly hard about making good deals. His wealth and company buy him good deals normal people cant get.

Bobber

Jul 24, 2017 at 8:48 pm

Maybe he realized money doesn’t make you happy once you have the basics covered. I wouldn’t say a kitchen remodel is going to make people happier, except in a shallow passing sort of way.

Keith

Jul 24, 2017 at 11:39 pm

But he has changed economical dynamics for hundreds of million people. Get a clue people

milking institute

Jul 24, 2017 at 5:33 pm

Reality is often quite different from what we are being sold,just like OJ was never the shining sports hero and Americas favorite dad Mr Cosby in reality was…well you know the story. uncle warren,behind his carefully cultivated image and surrounded by adoring business “journalists” that want to sit on his lap to hear just one more of his precious wisdoms,is and always was a crafty crony capitalist more than happy to make deals with the slimy swamp creatures of DC. the keystone pipeline and his railroad business being just the latest example. someone once had a great explanation why these billionaires hide behind their progressive “gut mensch” images: they are buying insurance. how can you be such a money grabbing vulture if you care so much for the working man and the poor? see? it works!

Raymond C. Rogers

Jul 25, 2017 at 12:21 am

You’ve hit the nail on the head in more ways than people realize. Too many people are not able to connect the dots between big government (in terms of revenue and the inefficient layering of bureaucracies) and big buisiness. The two are made for each other.

alex in san jose

Jul 24, 2017 at 7:29 pm

I don’t know how anyone things Warren Buffett is some kind of God-Damn teddy bear. He’s a rapacious parasite. Think “Mom” in Futurama…

If I understood correctly, Buffet started acquiring wealth some 50 years ago by skimming the fat off bloated and badly managed corporations. This same trait took him through some 20-30 years of subesquent wealth acumulation. Add some cumulative interest accrual when money was money and not some sh++t paper, and there you are, zillions in your bank account.

If he had started now, he would have no-one to skin. We have all beeen stripped off our epidermic so well and truly that the next step is falling dead on the pavement.

CanadianCrush

Jul 24, 2017 at 3:39 pm

It’s no secret that policy makers in the US decided to dramatically lower lending standards after 2000 when the Dot-com crash hit the US economy hard. Policy makers knew that unusually strong gains in house prices would create the “wealth effect” and stimulate the entire economy. Canada followed the US lead.

As of right now, if you compare how much higher house prices are in Canadian cities compared to 2000 levels and do the same for American cities, the results are mind-blowing.

House prices in Toronto and Vancouver are 4 times higher than 2000 levels while gains in incomes in those cities have added up to only a fraction of that amount. Prices in Victoria are more than 3 times higher than in 2000.

Even in Halifax house prices have more than doubled since 2000. Gains in house prices in that city certainly don’t compare to cities like Toronto, Vancouver, Victoria or Hamilton.

However, Halifax does compare to San Francisco in terms of house price gains since 2000. What makes the situation in Halifax far worse than in San Fran is that Canadians have amassed record household debt (most of it mortgage debt) while Americans largely deleveraged during the GFC and debt levels in the US are no longer at crisis levels.

This makes the situation in Halifax much worse than in San Fran. Americans often talk about San Fran as one of America’s bubble 2.0 cities, while Canadians rarely mention anything about a bubble in Halifax.

This shows how unbelievably huge the Canadian bubble has been allowed to inflate.

Plenty of bubble deniers in Canada right now – policy makers, bankers, economists are leading the way in that regard. This happened in the US and other bubble countries as well before the inevitable housing bust began.

Policy makers, bankers and economists in Canada will be less cocky about how it’s different here as the bust takes place.

rainclouds

Jul 24, 2017 at 7:09 pm

Halifax avg house price 300k
Halifax household income 75k

It is NOTHING like San Fran

CanadianCrush

Jul 24, 2017 at 8:46 pm

What you and other realtors don’t get is that in 2000 San Fran’s average house price compared to income was much higher than in Halifax at that time. That’s how it stands today. Therefore, you proved nothing in your comment. All it proved was that you couldn’t understand the point I made.

All that’s important here is gains in house prices since 2000. Prices in both Halifax and San Fran have more than doubled since 2000 while income gains in both cities have been far from that amount over the same period.

Halifax was one of several Canadian cities mentioned in my comment. I also mentioned Victoria where house prices have more than tripled since 2000 as well as Vancouver and Toronto where house prices have more than quadrupled since 2000 with incomes doing almost nothing in comparison.

I encourage you to read my comment again.

Anon

Jul 24, 2017 at 7:26 pm

Halifax is the provincial capital of the have-not province of Nova Scotia. NS has been receiving equalization payments (subsidies) from the Federal government for about 60 years. It is silly to compare Halifax to San Francisco, which is a wealthy city in a wealthy part of the US. It is hard to think of Halifax being at the center of a real estate bubble.

CanadianCrush

Jul 24, 2017 at 8:52 pm

Read my comment again. In no way did I compare San Fran to Halifax. as a city.

the comparison had to do only with how much house prices have increased since 2000 in both cities (approximately equal).

It’s silly of you to make such a comment. It shows that you don’t read what others write.

The main point is about how much house prices in major Canadian cities have increased since 2000 compared to San Fran over the same period, which is considered by many Americans to be one of their bubble 2.0 cities. This points out how big the Canadian housing bubble really is.

Anonymous

Jul 24, 2017 at 4:13 pm

Canada is run by a court jester and its people are the “Greater Fools” and yes, thanks to Mark Carney, this bubble started under his watch before he left for greener pastures. And don’t believe what you read about our wonderful , universal health care system–it’s anything but that.

Alistair McLaughlin

Jul 24, 2017 at 8:20 pm

It is sort of universal – universally mediocre.

And for once the spellcheck on my iPad has allowed me to spell my name correctly – ‘Alistair’ instead of ‘Alastair’. Yay!

nick kelly

Jul 25, 2017 at 1:29 am

In 2010 my spouse (55) had probs breathing.

At 2 AM ambulance arrived. She spent the night in local hospital in Nanaimo, Vancouver Island, BC.

Next day ambulance takes her to Victoria’s Royal Jubilee Hospital.

Next day she has stent put in heart (via wrist)

Next day she is discharged.

This is where medical coverage ends. So far there is no charge for ANYTHING.

I pick her up in Vic. Maybe ambulance was available back to Nam, don’t know.

Next week she is back at work.

So question: what not to like in this system that would have bankrupted many US families ?

Pray tell me how it is ‘mediocre’.

Alistair McLaughlin

Jul 25, 2017 at 8:10 am

Spend 36 hours waiting in an emergency room some time and then tell me. Things like that do happen, even if they never happened to you. You had a good experience. Many do. There are also many horror stories. Pray you don’t have one to tell yourself some day.

And presenting the US system as the only alternative is a straw man argument. At no point did I recommend we mimic the US system. I do believe in a universal healthcare system. But we need to do it like Europe does, where private, for-profit care is available for those who wish to pay for faster or more advanced treatment. Far from being seen as a problem – for-profit medicine is accepted and encouraged in most European countries, and used to supplement and improve the public system. They end up with better healthcare outcomes at a lower cost, while fully respecting the right of the individual to use his own resources to improve his own health outcome.

Petunia

Jul 25, 2017 at 8:43 am

A McL,

Your statement is ludicrous because the financially secure always have alternatives, to everything. I want a single payer system, but if you want to spend more for more attention, that’s fine with me.

Alistair McLaughlin

Jul 25, 2017 at 2:43 pm

Petunia, usually the only alternative to the public system the financially secure have in Canada is to seek treatment in the US or overseas. There are a few exceptions – Cambie Surgery Centre in BC, Shouldice Hospital in Ontario (specializing in hernias only) and some private clinics in Quebec that can do diagnostics, but for the most part, if you want out of the public system, you have to look outside the country. That ties up public resources that might otherwise go to the next one in line, who doesn’t have as much money and can’t afford to look elsewhere.

Years ago in Manitoba some private MRI clinics started to operate, and basically eliminated the MRI backlog, as those who could afford it opted to pay for faster treatment. The public system had nothing to do with these clinics, and it cost the taxpayers nothing. In fact, they were taxpaying businesses themselves. The Manitoba government decided this wasn’t fair, and purchased the clinics and brought them into the public system. Guess what happened to wait times – right back up again. When nobody is allowed by buy their way out of line, everyone stands in line.

What is the largest one line item in the CDN budget? It is the interest paid on Govt debt. Far exceeding health and education combined. From 1935 until 1974 the BoC provided the CDN governance., at all levels, with debt free money for use on social and hard infrastructure and the CDN govts. carried a small and easily manageable debt load to GDP even after CDN excessive contributions in fighting WW II. Or how the CDN nation was built considering her small population and vast size. After the ‘Crime of 74’ the previous Trudeau admin. at the behest of the BIS stopped ‘borrowing’ from the BoC, instead using large international commercial banks and govt. debt began rising exponentially, especially after the exorbitant interest rate increases in the early 1980s. Could this be the reason why health care expenditures have not keep pace with population growth and the inflation of health care costs and wait times have slowly increased over the years? And what is the largest single one line item of health care costs? Remuneration to Doctors. Cdn universal health care is being assaulted by the financialization of all things that is sweeping the western world.

Paulo

Jul 24, 2017 at 10:18 pm

Anon,

I’m 62 and have nothing but good experiences with our Canadian health system. My 57 year old wife has been a type 1 diabetic from age 13. Her health is very good, thanks to our system and her care and attention. I have survived a bout with cancer and numerous work related injuries over the years. As a healthy retiree/carpenter I am currently building a small rental for a friend. I really don’t get your comment. This single-payer system costs 50% of the US system per GDP and we have better outcomes. Perfect? Assuredly not. But very good and dependable, imho.

Canadian housing bubble? You bet, and the crash will be a doozy. However, the only victims will be the fools who bought into such an unaffordable market. Hopefully, people learn by making mistakes. When I was 24 and had to renew my mortgage the rate ballooned to 18%, and the house was ‘underwater’ almost immediately. I sucked it up and never missed a payment. When I sold it 8 years later my sweat equity probably netted me $1.00/hour. Because of that time we have always lived very modestly and within our means. I have been mortgage free from age 40 due to that mindset. Of course we drive junkers and cook our own food. :-)

Paulo

Jul 24, 2017 at 10:24 pm

note:
I saw on the news tonight a story about a free health clinic for 2,000 people. It was in Virginia, I believe. Some people lined up for it since Wednesday….5 days. Today, my wife went to the clinic for a consultaion for her diabetes and a torn muscle she sustained while gardening. She waited 5 minutes. This was in Campbell River, BC. Her appt. lasted 20 minutes. Cost? Covered 100% by BC Med.

alex in san jose

Jul 24, 2017 at 10:55 pm

Paulo – they slept overnight to keep their place in line, many travel *many* miles to get there, too.

Paulo, good for you and your wife but be prepared if you come to S. Ont., especially the GTA (Greater Toronto Area). Ontario is not beautiful British Columbia. You’ll wait hours if you need some kind of med service. Don’t get in a car accident here.

PRice

Jul 25, 2017 at 6:38 am

Speaking as a Virginia resident, you guys need to get a grip on what you see in the cited Mail article. Read some of the thousand+ comments there for clues.
Do you feel proud that the Canadian government stole money to benefit you personally?

Alistair McLaughlin

Jul 25, 2017 at 8:13 am

See my reply to Nick Kelly. Not everyone’s experience is like yours. 63,000 Canadians had to go to the US to seek treatment in 2016. I’m guessing they’d have a different story to tell you about our system. Just because it’s better overall than the US system doesn’t mean it’s anything to brag about.

Petunia

Jul 25, 2017 at 8:51 am

A McL,

A great many of the Canadians who come to the US come to Florida where they own property. The health care they receive in the US is covered by their Canadian insurance, which they pay for before they leave. They buy it to cover themselves from having accidents and use it for other purposes as well.

Anonymous

Jul 25, 2017 at 12:05 pm

To Paulo and Nick Kelly, I’ll say it again: Ontario is not BC. We have a very corrupt provincial (Lieberal) gov’t in place that has looted the public treasury to the point where Ontario now pays almost C$1 billion per month in interest payments on its accumulated debt (http://www.ofina.on.ca/borrowing_debt/debt.htm scroll down to “Net Debt and Interest on Debt” and read C$11, 581 million. It’s been going up every year since 2008/09.

The GTA has more people living in it than all of BC I believe, the car drivers are absolutely insane, and wait times in hospitals are much longer here. Don’t get sick or injured if you come here :-)

Alistair McLaughlin

Jul 25, 2017 at 2:52 pm

The health care they receive in the US is covered by their Canadian insurance,/I>.

You’ve just unwittingly cited a very great irony in Canadian healthcare system. That travel health insurance, purchased in Canada and useable in the US, is not valid in Canada. Only foreigners are allowed to use private health insurance in Canada. Canadian residents don’t even have the option of privately insuring for any service covered by their provincial healthcare plan. We can purchase supplementary coverage for drugs, physio, etc, but not hospital or doctor care. Canadians can’t even purchase insurance for treatment in the US, with the one exception of travel health insurance. Insurance companies tried a few years ago to market year round health insurance to Canadians for treatment in US hospitals. It was shut down because it violated the Canada Health Act.

Jim

Aug 4, 2017 at 2:39 pm

The Canadian health system is mediocre at best. It tanks poorly when compared with other systems such as nhs, or germany

Something different

Jul 30, 2017 at 4:03 pm

Agree with your comments on Carney. But Canadians let it happen, as do Americans. As long as Canadians vote liberal or conservative, they’ll keep getting Carneys, bubbles, and QE for the rich. Some politicians of old did the right thing even if it hurt them politically. Today that only exists in Iceland if anywhere.

If people want something different, they must do something different. Some examples:

1) As much as possible, don’t spend your hard earned dollars on products from unworthy companies, buy from worthy local or small businesses even if it costs a bit more or make it yourself. It really doesn’t cost more in long run as amazon/walmart low prices are offset by taxpayer subsidies or bailouts (short term slight of hand financial tricks….give them a free Gillette blade holder to lock them in and make your money on the expensive replacement blades). A few quarters of -1% growth will cause the hedge fund rats to jump ship and thus can kill any crony business. Only takes a few committed consumers boycotting together to cause -1% growth in a company.

2) don’t invest in any ETF that invests in crony companies (invest in your own business rather funding a dirtbag). Why lend a crony your savings for 1.2% yield when you can get at least 7% with your own business.

3) Vote for good people, not who you think will win or give you a quick tax break. Your candidate may not win this election, but you will build momentum for good candidates that could win the next election. Independent or 3rd party politics is the only path to something different. If you want something better you have to take a risk. Existing lobbyists and primary parties with use any half-truth to brainwash you into believing that only they can keep things from getting worse. They will also try any figurehead of different religion/color/background to make you believe the party has changed its ways. Judge a party by its results not its promises or excuses.

Make your votes and hard earned dollars count by where you give them.

Nicko2

Jul 24, 2017 at 4:22 pm

Canada’s secret weapons is immigration, quotas are being increased by several tens of thousands to juice the economy (particularly highly skilled migrants). Not that I see anything wrong with this, we’re a huge, mostly underpopulated land mass; and my investment property has gone up in value about 10% in the past 6 months.

CanadianCrush

Jul 24, 2017 at 5:52 pm

There’s no evidence behind your claim that it’s different in Canada due to (your claim) the country being overloaded with (what you claim are) wealthy immigrants who (you claim) are buying up all of Canada’s real estate which (you seem to think) will be the new normal in Canada and will prevent the natural bust part of the real estate boom-bust cycle from taking place in Canada.

No evidence to back any of your claims. You sound like a realtor.

Bobby

Jul 24, 2017 at 10:10 pm

I’m with you (Nicko2). Wealthy immigrants are pumping the real estate. The evidence can be found in every new subdivision.

CanadianCrush

Jul 24, 2017 at 10:59 pm

You’ve provided no verifiable evidence (facts, stats, etc. from a reputable website) to back your claim.

Other realtors must have taught you well.

robt

Jul 24, 2017 at 6:59 pm

You forgot the /sarc/

Alastair McLaughlin

Jul 24, 2017 at 8:17 pm

That’s funny. You are telling yourself exactly what every other Toronto and Van proper owner has been telling themselves. Most immigrants coming to Canada don’t have much of anything.

Gershon

Jul 25, 2017 at 7:04 am

Selling off your country to Chinese embezzlers and money launders may not be such a hot idea in the long run.

Lee

Jul 24, 2017 at 9:32 pm

You guys need to import more of America’s illegal immigrant exports.

You know those MS-13 people and all those others like that – for diversities sake.

Too many ‘white’ people in Canada!!

ru82

Jul 24, 2017 at 10:22 pm

Why do people want to live where it is so cold? Why doesn’t the land home prices in North and South Dakota or Wyoming go up as much as Canada? They are farther south.

Paulo

Jul 24, 2017 at 10:32 pm

RU82,

I live on Vancouver Island but my Dad’s family are all Minnesotans. You think the mid-west isn’t cold? Montana? Southern Vancouver Island has a modified Mediterranean climate. Where I live we seldom even get snow. I just came in from fishing wearing shorts and sandals. No bugs. (I lost a small coho).

There are reasons why people live here. My biggest concern right now is a pesky black bear lurking around our place. It ain’t Chcago, that’s for sure.

CanadianCrush

Jul 24, 2017 at 11:16 pm

Victoria had plenty of sub-zero weather and snow this past winter. Take a look at the weather stats.

In no way does Victoria’s weather compare to that of California, Florida or any warm American city or any other warm city in Spain, Italy, Greece, etc. and housing markets in all of those states and countries experienced major housing busts.

History has shown that markets in warm weather locations go through major housing busts just like markets in cooler weather locations. In fact, in the US housing bust, warm weather locations were hit with worse busts overall than cold weather locations.

California, Nevada, Arizona, Florida, etc. likely experienced more speculation than in many of the colder states and it’s no secret that housing markets with the highest levels of speculation go through bigger price busts.

BC has likely experienced more highly-leveraged speculation than any other Canadian province, which isn’t a good thing for house prices in BC as Canada’s debt-induced housing boom inevitably enters the bust part of the housing boom-bust cycle.

Jim

Aug 4, 2017 at 2:41 pm

Underpopulated? Not according g to David Suzuki. Livable land in Canada is rare, arable land is disappearing. Most immigrants go to three cities that are already over capacity. Toronto to is running out of electrical and transport capacity for instance.

Endless growth is not sustainable

mick

Jul 24, 2017 at 4:34 pm

Pump and dump. Yes, the government, media, and “respectable people” do it all the time.

greg

Jul 24, 2017 at 4:35 pm

Now many Canadians will be sending Uncle Warren approx. 50% of their income for 15 to 25 years!

john

Jul 24, 2017 at 4:55 pm

Exactly. Thats what the big meet with buffet must have been about. Pledging the full faith and credit b.s. meaning a promise to tax their citizens to pay the inside trader. And yes thats exactly what buffet is. Same deal as here in this country.

kam

Jul 25, 2017 at 8:42 am

Of course, Buffet wouldn’t have mentioned stopping that Canadian portion of the Keystone Pipeline, now that Obama is gone and can’t do his bidding. Got to keep those rail cars filled with something.

night-train

Jul 24, 2017 at 4:59 pm

Crony Capitalism is where “you” get special treatment. If I get a special cushy deal designed just for me, it is just good ol’ market based capitalism.

30 investors trying to do the same thing would have made a market. But this was a secret deal possibly with secret assurances from the Prime Minister. After it was all worked out, the deal was announced. You can see by the stock movement in the two weeks prior to the announcement that some people knew about it and bought the shares in advance.

This is reminiscent of the Financial Crisis deals Buffett made with Goldman (warrants and a loan). He later admitted that when he’d made the deal he’d known the Fed was in the process of bailing out Goldman and the other banks. So for him, there was zero risk. The public didn’t know this. That was crony capitalism at its best.

Without the Fed’s bailouts of the banks and insurance companies, Buffett’s banking and insurance empire would have been in deep trouble. Don’t ever underestimate just how smart he is and how he operates.

Bobber

Jul 24, 2017 at 8:55 pm

I think Buffet fancies himself a modern day JP Morgan.

Meme Imfurst

Jul 25, 2017 at 7:22 am

I think more like The East India Company

SimplyPut7

Jul 24, 2017 at 5:05 pm

Too bad Canada let the housing market get out of control, we would have been able to keep our dirty little secret about how politics and business actually works in Canada.

What you call crony capitalism, is what we would call a collaborative effort between the private sector and the public sector. These types of assisted transactions are common in Canada. Another little secret is the government will do everything in their power to help broker deals, if it means keeping the business Canadian, even if the foreign offer is a better deal. The books at Home Capital must be really bad, no Canadian financial institution wanted to touch them.

So far, the housing downturn has not been that bad, mainly because people still have large home equity lines of credit to keep them afloat. Speculators with empty homes sitting on their credit lines, are a bit nervous, but everyone is refusing to drastically reduce their asking price as they only have to pay the interest on their loan for now, and would rather wait until the Fall to see what their next steps should be. I haven’t heard of anyone getting a margin call to reduce their line of credit yet.

Average prices are still slightly higher than last year this time, it’s just they are lower than prices from the peak of March 2017 and some people may never recover what they paid for their homes to win the bidding war. We do have some people relisting, as buyers have refused to close on the home they bought, and have chosen to lose their deposit of $50,000 or more, instead of paying in full for the home. Yes, the seller can sue, but good luck trying to get money from someone who was depending on a bank loan, line of credit and/or the sale of their home to pay for the new home they intended to flip. The seller also has a problem of they most likely bought their new home first, did not sell their current home and will probably not get the price they were expecting to reduce the mortgage on the new home. It’s unknown in Canada how many homes are in this situation now, as they are on borrowed time from the bank who has bridged their loan until they can sell their current home.

The big story in Canada now is interest rates, how much will they continue to go up. The media is down playing this story. We have lots of nervous homeowners who didn’t expect to pay higher mortgage rates or lines of credit any time soon, and overpaid for homes they wouldn’t have given a second look to, if they knew prices would go down and inventory would go up. Also, most mortgages are short-term e.g. 5 years fixed or less, some are variable mortgages that increase with every Bank of Canada rate hike.

The mentality in Toronto and Vancouver was: rates will never rise; prices will continue to go up; and don’t worry about the high mortgage because you can use the equity in the current house to reduce the mortgage in the next house. I don’t know of anyone who bought in the last several years who seriously thought they would have to pay back the mortgage principal plus rising interest costs, in full; which is why we had homeowners, banks, mortgage brokers and realtors encouraging these embarrassing bidding wars for homes.

Hopefully in September and October, Canadians will get more guidance as to how many rate increases they can expect in the next couple of years. The larger banks in Canada are hoping for 3 more 0.25% increases between October and December 2018.

LBJ

Jul 24, 2017 at 6:09 pm

When the banksters see a pile of stored up wealth, they plot to steal it, and their method is to capture the relevant part of the government in order to enable themselves to steal it. It’s really just as simple as that. That’s the story of Canada–a nice, big welfare state pig waiting to be slaughtered. And so they did!

Oh, and don’t forget to include a fundamentally corrupt and ignorant populace–the boiling frogs of the piece. In the end it’s the people’s fault–but we can’t say that, so you didn’t read it here.

Only please don’t interrupt the supply chain, when the whole Canada thing falls to pieces. And you’re reading this from someone who knows the supply chain very well–learned it from FDR!

Mark

Jul 24, 2017 at 6:24 pm

“Only when the tide goes out do you discover who’s been swimming naked.” – Warren Buffett

Wouldn’t it be ironic if Warren was caught out in the shallows nude on this deal.

I got some feedback from a real estate agent in Sydney the other day and it appears the tide is now running out.
While auction clearance rates are still being reported at 70+% each week, the agent said this number is a complete sham and the reality is closer to 30%. I asked him how this works and he said the official number we see in the papers each week reflects the sales which real estate agencies choose to report. Properties withdrawn or passed in are not reported because why would agencies shoot the goose that lay the golden egg.
Further to this he told me conditions changed dramatically about 8 weeks ago. Instead of seeing 50 or more groups to open house inspections in a suburb of Sydney like Epping where Chinese buyers were swarming in 2016, they are now lucky to see 5 or 6 groups on the opening weekend and the Chinese buyers have disappeared. He estimated that conservatively prices have already come back 10% from a peak in April.
This is but one agents assessment ofcourse, but I tend to believe this is the case rather than go by the hype which is printed in a newspaper. The paper relies on real estate classifieds for income after all.

Alastair McLaughlin

Jul 24, 2017 at 8:12 pm

Buffet has been guaranteed that the Canadian government will rescue HCG if it comes to that. No way would he have bought in without such assurances.

RD Blakeslee

Jul 24, 2017 at 7:42 pm

It is consoling to me that the tenor of this blog may represent the maturing of the American citizen’s understanding how things really work in finance.

There may be no fixing it, but one thing’s for sure: You can’t fix something you don’t understand.

Alastair McLaughlin

Jul 24, 2017 at 8:09 pm

Buffet bought Home Capital because he received assurances – either explicit or implicit – that the Canadian government would not let it fail. Buffet doesn’t throw money away on risky ventures. Just like when he loaded up on Bank of America shares in 2009 – he knew damn well that the US government was not going to allow another bank failure, period. So for Morneau to act cute and say he didn’t specifically discuss this file is a load of crap. If he didn’t, someone else from the Department of Finance did. And if they didn’t talk to Buffet directly, they let it be known through whatever channels they needed to that HCG would receive government backing if necessary. Call it the Morneau Put.

john

Jul 24, 2017 at 11:50 pm

Call it insider trading. What buffets been doing ever since his daddy set him up with the golden spoon that he also received from insider trading. In other places they would be known as and referred to as crooks. But no, here they call it capitalism and hand them medals.

HBGuy

Jul 24, 2017 at 8:11 pm

Crony capitalism is a time honored tradition in Canada dating back to CN Rail in the 1880s. Not much has changed in the
Intervening years. Trudeau and his minions are economic morons who are able to smile

As for Buffet, it’s business as usual. I can only hope Berkshire loses big.

Tom Stone

Jul 24, 2017 at 8:14 pm

A minor correction regarding California, only “Purchase money loans” are non-recourse.
Refi your house and it is a different story.
Same thing with a home equity line not used as part of the original purchase.

Yes, the linked article that goes into all this in detail explains the “purchase mortgage” limitation not just for Cali but for the other states. There are other limitations too, depending on the state.

A very strong BS from the Canadian finance minister. I always assumed Buffet’s investment was similar to the preferred shares he got from Golden Sacks during the free fall of 2009. Maybe this was a government guarantee.
“We want to make sure people’s big investment… is safe and secure as best we can”.
Yet another crook in the long line.

Meme Imfurst

Jul 25, 2017 at 7:36 am

See, Americans have a really short memory…may be 3 hours, IF they get any ‘real’ news at all.
Americans either forgot or don’t know that Warren was like a fixture in the last White House, and when the banks were going down, he had a choice given to him…cufflinks or Wells. He took Wells since it gave him unfettered access to the FED window. That he wanted that more than any shares in any bank, now he OWNED the bank.

Oh, and lets not forget that all the Central Banks now are ex-Goldman, including Canada and the UK.

It is a game we can not understand, one they are taught from year two on.

kam

Jul 25, 2017 at 8:54 am

MeMe
The game is pretty simple and it has a long history. It is us and them. The wannabe royalty is no different from historical royalty. Rules only apply to you, and are never enforced against them.
If you bought a million dollar house in Toronto or Vancouver and married a $900,000 mortgage, you also signed on to a lifetime of servitude. Slavery isn’t dead, it just has a softer name.

Kent

Jul 25, 2017 at 9:33 am

Indentured servitude where the master is relieved of the burden of having to give a $&!@ about you.

Wilbur58

Jul 24, 2017 at 11:18 pm

It’s beginning to feel like housing is sacred not just to the masses, but to our corporate overlords. You can almost hear them saying, “So long as everyone has a house, a car, pizza, and ice cream… we can take everything else.”

The entire global policy seems to be… get people a house, somehow, someway. Stabilize it… somehow!

There is another option… sharing more of the income. Heaven forbid. But our monopolists / oligarchs really seem to fear that if housing cracks, the pitchforks come. Maybe they’re right?

john

Jul 24, 2017 at 11:56 pm

Lol. Surely you have heard of flum flam artists. They tell you whatever it is you want to hear.

c smith

Jul 25, 2017 at 8:48 am

Housing IS sacred because it supports the bankers and bureaucrats at the center of power. Keep the values up so the bankers never have to worry about losses on their loan security. Keep the values up so the bureaucrats can continue to collect property taxes to pay their cushy salaries, benefits, pensions, etc. See how that works???

SimplyPut7

Jul 25, 2017 at 6:21 am

I don’t think Canada would bailout Home Capital. Our larger banks want Home Capital to fail, to get back the borrowers they lost to the private lending sector. The banks and credit unions (non-banks) would never want Buffett to stay too long in Canada, and can strongly influence the policies that are developed in the provincial and federal government to deter that from happening.

I think the government didn’t want to see Home Capital fall while the world was watching, and since no Canadian firm wanted Home Capital, they asked Buffett to help them, until they could secretly find a Canadian solution to the private home lending business.

Canada is very authoritative and won’t give in to Buffett demands. They would let Home Capital fall if it meant keeping the mortgage industry in Canada solely owned by Canadians. At most, I think they would let the HCG shares go to $0, let Buffett sell the mortgages for pennies on the dollar so he can get his money back (many of those homeowners are insolvent anyways, they were going to lose their home sooner or later), review the policies and regulations of the private lending business to see where are the holes in their risk models, and make sure that kind of failure from a mortgage lending company never happens again.

Think of Buffett as Canada’s guinea pig in the federal government’s experiment of allowing a major lender in the private mortgage lending business to fail. If they get their way, he won’t be in the lending business in Canada for too much longer.

kam

Jul 25, 2017 at 9:00 am

“Canada is very authoritative” and “Buffet is the guinea pig”

Canada was the menu on Warren’s buffet.

A Kindergarten teacher and a second-rate Toronto hustler out-negotiated Buffett?

SimplyPut7

Jul 25, 2017 at 10:17 am

In Canada, corporations (especially foreigner ones) do not dictate policy to the Canadian government. Netflix and Google tried that in 2014 when the Canadian Radio-television and Telecommunications Commission (CRTC) demanded they hand over information about their Canadian subscribers and they refused. The CRTC got angry with them, Google caved, but Netflix publicly stated they would not share their data. I can’t find the article, but I’m pretty sure Netflix did share some information with them later.

The only reason they didn’t let Home Capital fall is because too many people around the world were watching and they were not going to let speculators create a fire sale in the Canadian housing market.

I do think the regulators will dissolve Home Capital and let Buffett hold onto the mortgages, once they get better risk measures in place to prevent foreign entities in the future from having a controlling interest in a Canadian financial institution. In Canada, most banks, credit unions (non-banks) or private lenders have Canadians as the controlling interest. Even if it looks like a new “competitive” bank, credit union or private financial institution is coming to Canada, their accounts usually are controlled by our 6 biggest banks.

I think Buffett made some assumptions about property rights (of Home Capital the company, not necessarily the mortgages used as collateral to create the line of credit), and the way business functions in Canada, that is different from the power and influence American corporations usually have in the US and their political system.

The kindergarten teacher and a second-rate Toronto hustler did not plan this maneuver, there’s a team people behind the scenes who needed Buffett for now, and are planning to get rid of him as soon as they can do so without too many people watching or caring to impact the rest of the housing market.

Alistair McLaughlin

Jul 25, 2017 at 2:25 pm

Google and Netflix failed to dictate policy because Rogers and Bell were already dictating policy.

Jim

Aug 4, 2017 at 2:48 pm

Again. You really think k that buffet is incapable of dealing with the Canadian government. You are a fool. He has decades of experience in this sort of matter and very good advisors.

rob in london

Jul 25, 2017 at 6:59 am

Wasn’t Buffett supposed to have been an acolyte of Ben Graham?

Considering his actions of late and pronouncements on the soundness of the economy and stock valuations I find that really hard to believe.

kam

Jul 25, 2017 at 9:07 am

Graham’s investing yardstick never anticipated what to do once the investor became the market.
Buffet is of a size where only investing in politicians gets you the return you want.

Gershon

Jul 25, 2017 at 7:08 am

The Fed is starting its FOMC meeting today. Using my Nostradamus-like powers of foreseeing the future, I predict that Yellen will mumble incoherently about the “strengthening recovery” while continuing to come up with creative excuses for not being able to hike interest rates until “the data” convinces her the time is right, or until Jesus returns, whichever comes first.

No one is expecting a rate hike at this meeting. There will not even be a press conference. So Yellen won’t even be mumbling.

There have been rate hikes every other meeting since December. Every one of these meetings was a press conference meeting. The only two meetings left this year with a press conference are September and December. Those will be the two meetings with announcements.

There are two possible announcements left for this year: one rate hike and kicking off the QE unwind.

Since December, the Fed has been like clockwork.

c smith

Jul 25, 2017 at 8:31 am

Keep those home values inflated! Banker’s and bureaucrat’s livelihoods all across Canada depend on it! And if the bailout somehow fails, just run the printing press to smooth over the whole mess! So few people can see that this inflationary graft is the direct cause of so much income/wealth inequality and stagnant real wages. The financial elites are skimming the value from the top of the system and not one in a hundred people can figure it out. As someone in DC once said, “Sad.”

Kent

Jul 25, 2017 at 9:44 am

What would the long-term harm be to enforcing a regulation that says banks cannot create a mortgage loan for more than 3 times a couples income, and only if they put 50% down?

Hopefully the folks on this blog understand that banks have a special capability no one else has: the ability to print money out of thin air, and collect interest on it.

Why are we as a society forced to live in an environment where the greater portion of our wealth must be put into shelter?

Petunia

Jul 25, 2017 at 10:27 am

I was listening to an interesting talk about financing property with personal loans instead of 30 year mortgages. If you have good credit they advertise loans under 5%. With a 5% loan for $200K you can pay off the loan in 7 years and your payment is $2800 P+I. The trick is not to spend more for a house than you can comfortably afford monthly. In 7 years you have 100% equity and can trade up again.

It would be interesting to know from where and how the CDN govt. appropriated the 2 B and what sweetened the deal to get Buffet to act as the straw man in this bailout of the shareholders and owners of this predatory lending LLC ? Who suggested to the Trudeau puppets that they ‘save’ Home Capital Group instead of winding the failed business down? The CDN housing bubble, built by former BoC governor Mark Carney (ex G.S. executive) is set to implode as what is pushed to unsustainable heights in price is, despite off setting bailouts, well unsustainable.

steelhead

Jul 25, 2017 at 3:42 pm

It seems that 90% of the commentators misspell Warren B’s last name. The correct spelling is Buffett not Buffet. I’m probably more sensitive because 99% of people misspell my name (four letters) and even if I spell it for them most of the time they do not get it correct.

JB

Jul 25, 2017 at 4:32 pm

I kinda think WB held his nose on this deal . he is sitting on a 60 billion war chest (cash) with no home. however the initial private placement equity purchase for 10 bucks a share did not require stock holder approval . his stock just went up a buck a share today (8 %) to 14.59 . the equity stake was probably a “kicker” for the loan.

Jim

Aug 4, 2017 at 2:50 pm

Without government assurances buying into home capital would have been idiocy.

mean chicken

Jul 25, 2017 at 7:29 pm

Drain the sewer before it’s too late (hint: It probably is.).

SimplyPut7

Jul 26, 2017 at 2:53 am

Home Capital paid back the $2 Billion (Canadian) credit line from Berkshire Hathaway Inc.

I wonder if the shareholders for Berkshire will still want to increase their stake in Home Capital from 19.99% to 38.39% at the special meeting in September.

michael Engel

Jul 26, 2017 at 8:21 am

WB move on Home Capital is done to build a powerful moat, an important connection with the Canadian government.
Now he became an integral part of the Canadian government, without the need to be elected, with the risk of becoming a cast out politician, – re writing the history of his father-, so can influence government decisions in his favor, the easy way, from inside.
Why ???
Canadian Energy, for saint Buffet & friends. And not just Canadian Energy, all type of energy + utilities.
Please check his & some wonderful WB friends investment in : SU, CNQ..
What can he offer ?
A lot. An amalgam of banks loans + financing, customers, management know how, plus the service of his other moats.

chris hauser

Jul 26, 2017 at 10:44 am

yes, jp morgan, maybe east india.

criticizing the arithmetic of saving a utility is criticizing the existence of the need. if you vote out the bums, vote some new ones in while you are at it.

as it turns out, it was a temporary crisis.

note the loonie has gone from 1.37 to 1.25. think i’ll look at home capital again.